A Beginner’s Guide to Brokerage Hacking

A Beginner’s Guide To Brokerage Hacking : Earning Substantial Side Income In a Few Hours

What is Brokerage Hacking?


Brokerage hacking involves taking advantage of promotional rules set up by online brokerages in order to earn substantial bonuses for opening up new accounts or adding to existing accounts.

A history of my brokerage hacking

First, let’s review, in sequential order, all of the various brokerage accounts I have had over the years, and why;

  1. Putnam Investments (my first foray into investing, suggested by a financial adviser)
  2. Janus Funds (I had funds rolled over from an IRA into Janus because they offered no load funds)
  3. Scottrade (My first foray into individual stocks, I believe I received “sign up” cash to open, and thus I was hooked)
  4. Tradeking (I didn’t like that Scottrade didn’t offer free dividend reinvestment, so I transferred my funds to Tradeking and received another sign up bonus.  It’s important to note that this is old information, and now Scottrade does offer dividend reinvestment.)
  5. Fidelity Investments (my wife has had investments there for years, and Tradeking customer service was awful and, with my new employer having their 401(k) admin through Fidelity, I wanted all my investments with a single log in.  We still have accounts with Fidelity (my Roth IRA, for example).
  6. Capital One Investing–                                                                                                                                     In 2015, Capital One Investing, formerly known as Sharebuilder, was offering an “enhanced” promotional bonus.  Their maximum bonus, $600, was available for total account transfers, within 60 days, of $125,000 or more.  Typically, this bonus level isn’t available until you have at least $200,000 transferred over.  Therefore, we transferred taxable assets from various accounts, plus $65,000 cash from our heroic Roth Principle Rescue, to achieve over $125,000 in assets required for the maximum $600 bonus.

The following is the line item from our Capital One Brokerage statement from 2015:

5/29/2015
15GET600M PROMO BONUS
$600.00

Needless to say, a few hours of work on my end was well worth it once I saw this cash deposited.

The Compounded Benefits of Brokerage Bonuses

If you read about my past, you will see that all my adult life I have been interested in producing income. Since I have a well paid full-time job during the day, and am way too lazy to get a part-time job that requires a lot of effort, getting free money from a benevolent brokerage organization seemed the next best thing.  Getting the money deposited into the account is merely the beginning of the party.  If you invest that $600 bonus into a low-cost index fund, it could potentially be worth over a $1,000 in just six years, assuming returns of 9.7% compounded (SP500 with dividends, 1965-2016).

Promo Bonus Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
600 658 722 792 869 953 1,046

Although brokerage account bonuses are considered taxable income, and you will receive a “1099” reporting this money, it’s still heartwarming to see the $600 on our 2015 tax return, listed as “Other Income” on line 21 of our 1040 (Federal Tax Return Document).  That was quite the part-time job I had. Was I flipping burgers, stocking grocery shelves, mowing lawns, breaking my back in summer heat doing landscaping?  Nope, I was filling out forms online and estimate I spent about 4 hours on the entire process.  My pay for this work was about $150 per hour, and since it’s still considered passive income for tax purposes, I was not charged Social Security Taxes, aka “FICA” on this income.

The Beginner’s Guide To Earning Brokerage Promotional Cash

Step 1-  Research existing brokerage promotions out there.

There are numerous online investment brokerages out there.  There are nearly too many to list, and new brokerages seem to start-up every year.  Therefore, I am going to give you a list of brokerages and compare bonuses based on assets or cash required to achieve them.  You can see a more complete list of current brokerage bonuses at Hustler Money Blog, but it’s not in a clean format I would like to see it in.  Instead of going through each brokerage and reviewing every single promotion, I am going to list some of the best promotional bonuses at different asset levels.

Best Brokerage Promotions by asset level requirements

Asset levels

$5,000-  Capital One Investing will give you $50 to open up an account at this level.  This is a fairly decent bonus for a nominal asset transfer. Promo Link 

$15,000–  Capital One Investing will give you $100 to open up an account at this asset level.  This is a generous bonus at this modest asset level.  Promo Link

$20,000–  Merrill Edge deserves praise for this limited time offer.  Merrill Edge will provide you with a $150 bonus to open up an account at this asset level.  This promo appears to be limited only to IRA transfers only.  Promo Link

$50,000–  Merrill Edge again impresses me with their promotional money offering.  Bravo to them.  At this asset level, you will receive a whopping $225 to open or transfer an IRA to Merrill Edge.  Promo Link

I think it’s worth noting that, since Merrill Edge only offers this promotional cash for IRA’s, if you wanted to transfer taxable assets instead, Fidelity, Capital One, and TD Ameritrade all offer a $200 bonus at this level.                                                                                                                                                                        Fidelity Promo Link            Capital One Promo Link                       TD Ameritrade Promo Link 

$100,000–  Schwab and TD Ameritrade are tied for the gold medal at this asset level.  They offer a whopping $500 in bonus money to open an account with $100,000 in cash or assets transferred.  There is a difference worth noting in these two firms, as TD Ameritrade will reimburse you for any brokerage account closing fees (to close your old account) and Schwab won’t reimburse these fees.  A simple work around to avoid closing fees is to keep a nominal amount of money in the old brokerage account you wish to transfer assets from.  Brokerages generally do not have inactivity fees, so this shouldn’t cost you any money.

Schwab Promo Link                   TD Ameritrade Promo Link

$200,000–  Merrill Edge is the winner in this category with $900 in promotional loot to open an account at this asset level.  This offer is only for new or transferred IRA’s.  Promo Link

Because the Merrill Edge is only offered for IRA’s, an honorable mention goes to Capital One, who will give you $600, at this asset level, if you prefer to open a taxable brokerage with them.  Promo Link

Getting brokerage promotional money feels insanely great.

$250,000–  TD Ameritrade is not messing around at this asset level.  They will give you a hefty day’s pay of $1,000 to open an account at this asset level.  Promo Link

$500,000 & $1,000,000-  Fidelity will give you $1200 & $2500 in bonus money to transfer assets into a new account at these lofty levels.  Promo Link

Other Offers of Note

Custodial Account Bonuses for Kids

Capital One investing offers a $50 account bonus for opening a custodial account for your children.  I took advantage of this offer for both my kids last month.  The beauty of this offer is there is no minimum to deposit.  In our case, we had our kids give us money from their piggy banks in order to open their accounts.  We want them to have skin in the game, and they were excited at the prospect of the money give away.  You must make one trade in order to qualify for the bonus.  We did one $4 sharebuilder trade in each account in order to qualify.  Custodial Promo Link

Airline Mile Bonuses

Fidelity offers up to 50,000 bonus airline miles for 3 different airlines.  The airlines are United, American and Delta.  You must have a reward account set up for your airline, in order to qualify for these bonus miles.  A nice side benefit of this bonus is it appears not to be taxable.  Please consult your accountant.  In our case, we are taking advantage of the American Airlines offer, as they seem to have decent flights to the Caribbean from where we live.

United Miles Link                      Delta Miles Link                               American Miles Link

Step 2 – Find the appropriate promotional link you wish to sign up for and fill out an application.  You must use the appropriate link, for the offer you desire, or you won’t get the promotional loot.  Please note that the firm offering the money will try to handle the asset transfer for you.  You need not contact your old brokerage from where the assets are coming from.  However, you will need to provide the new brokerage with various information, such as a recent account statement from the firm you are transferring assets from.

Link:  Comprehensive list of brokerage promo offers

Step 3-  Deposit cash or transfer assets.  Make sure to meet all the requirements of each promotion.  If you filled out an asset transfer form in step two above, you probably need to wait at least a week, or more, for the old assets to transfer into the new account.  If instead you are funding the new account with cash, you can probably set up a deposit right away, or shortly after you have opened up the new account.  It’s important to read the fine print of the promotion.  It’s likely you only have 45 or up to 90 days to qualify for the promotion.  If you are nervous you won’t meet this requirement, wait until you have sufficient assets prior to applying for the promotional loot.

Step 4-  Keep assets in for the required length of time.  Do not withdraw assets during this time frame.  Most brokerages require at least 6 months of time before you are free to transfer assets again without disqualifying for the promotional money.  As always, read all the fine print of each offer.  They aren’t giving you money for fun, so they expect something in return.  There is great news here, once that time-frame has safely passed, you can then transfer those assets to yet another brokerage, to take advantage of an additional promotion.  (Special Note for Fidelity airline miles promos, they require an extra long period of 9 months before you can transfer assets out again).

I think it’s also important to note that you can’t withdraw funds or assets during this waiting period.  You can’t even collect dividends in cash, as those count as withdrawals (unless you keep the cash in your brokerage account).  For example, if you deposit 100,000 in assets, and 3 months within your new account opening, you withdraw $10,000 for any reason, you no longer meet the requirements of having transferred $100,000 worth of assets, and likely will lose part of your promotional funds.  If you can’t afford to meet the requirements of the offer, my advice is to wait until you can afford to do so, or try qualifying for a lessor amount.

Why I never have had a Vanguard account, and the final word

In the FIRE (Financial Independence, Retire Early) world, it is common place to rave about how great Vanguard is for investing and index fund investing in particular.  This is for good reason.  John Bogle founded the Vanguard funds and basically invented index fund investing.  He also focused on reducing expenses as low as possible, so individual investors like me are able to participate in the stock market without having our returns diminished by large hidden fees.  Vanguard investments is so popular that an entire website exists, “bogleheads,” just to share notes about investing with like-minded people.

John Bogle has numerous great quotes, but my favorite is below.  He’s referencing what an investor should do when the markets are volatile.

Don’t do something…just stand there

My confession:

In spite of my respect for Vanguard funds, and having invested in mutual funds since 1996, I have never had a Vanguard investment account.  In fact, when people discuss and write about their Vanguard accounts, I can only “fake smile” about it.  When I was researching all the brokers I had been with for my Roth Rescue, I realized that I have not been very faithful over the years.

The reason I have never had a Vanguard account can best be summed up by the following sentence I saw when google searching for promotional bonuses for opening new online brokerage accounts:

Vanguard does not offer promotions for opening a new online brokerage or an IRA account.

Final Word

Brokerage account transfers, or brokerage hacking, can be an excellent way to earn money as a side hustle.  I encourage you to sign up for one, as I think you will be hooked.  Your first promo will probably require the most effort, due to a beginner’s learning curve.  However, once you do one, the rest will seem easy and fast.  The beauty of brokerage promo money is that it can happen over, and over, and over again.  Having these additional funds to invest will speed up the receipt of funds you will need to enjoy a long and early retirement.  As always, read all the fine print of each offer and make sure you meet all the terms of the offer.  If you have questions about whether or not you qualify, call up the brokerage and ask.  They are all competing for your business and are very happy to help new customers.  They will be very happy and eager to help you transfer your assets to their firms.

Have you ever brokerage hacked?  What type of side hustles have you done?

Would you like to get regular updates from the Finance Patriot?  Please subscribe to my reader list by putting your email address into the box in the upper right hand corner of the blog.  You will get a message each time a new post is published. 

10 comments

  1. Thanks for sharing, what a great article with a lot of information!

    I’ve never considered hacking my brokerage accounts… optimization is great, though I’m focusing on building my top line which will add up to more than $1,000.

    Have a good day, you’ve got a new subscriber!

  2. I’ve opened up accounts to get bonuses…usually bank accounts (Chase ones are decent). I’ve also gotten the small Capital One brokerage bonus. So if I transfer my Roth IRA from Vanguard to chase these bonuses, I’d have to invest in the other brokerage’s mutual funds right? How are their selections and expenses? Also, how long have you consistently done this and have the brokerages said anything? I got my wife to open accounts at Chase to get the bonuses and one time when she was closing it, a CS rep made a remark to my wife about her churning accounts for bonuses.

    1. You don’t have to invest in their funds, though I would recommend converting your mutual funds to ETF’s first. ETF’s are cheaper to buy and sell. When the assets transfer, they simply transfer “in kind.” Was it a Chase credit card? We travel hack as well. I wouldn’t mind a CS rep, they all will say different things based on the person, may have just been that person’s personal opinion.

      I have done this twice, once with Capital One, and now we are working on two airline bonuses at Fidelity. However, most brokers I have opened an account with over the years, I have received some kind of bonus money to do so.

  3. At this point, I’m more concerned with using the broker that has the cheapest commissions. Based on my current account size, every trade is costing me hundreds of dollars in commissions (and I’m using those cheap online brokers).

    1. Thanks for stopping by. Which broker do you use? Fidelity and Schwab charge only 4.95 per trade, each side. Have you considered no fee ETF’s? Most brokerages offer them. That’s usually what I buy.

  4. Thanks for the great info on brokerage hacking. Do you know if these offers are one time only? Can you transfer out to another brokerage firm to take advantage of another deposit bonus and then eventually transfer back into the original firm and get another deposit bonus if it’s still being offered?

Leave a Reply